Foreign Central Banks
The world’s major central banks took easing actions in August. Target rates dropped 0.25 percentage point: the Federal Reserve’s rate to 3.5%; the Bank of Canada’s to 4.0%; the ECB’s to 4.25%; and the Bank of England’s to 5%. Commenting after the Bank of England’s move, the chairman of its Monetary Policy Committee said that “[t]o fail to cut would run the risk of undershooting the inflation target and unnecessarily depress activity,” given that risks seem to be on the downside for GDP growth. The Committee’s inflation report indicates that with the new policy setting, the chances of undershooting the 2.5% inflation target are only slightly better than 50/50, as are the chances of undershooting 2% real GDP growth.
Suggested citation: "Foreign Central Banks," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-09, pp. 18, 09.01.2001.